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O.K., so even if Savage He-Man was originally fake or a custom, I am still a fan. But the thing I don't understand is there is an eBay listing where he is being sold for an very big amount of money. In the listing it states that the figure is AFA 80. If it was officially AFA'd, and it states the manufacturer is Mattel. How is that, if he never truly existed from Mattel?

I guess you need to reread the thread: an actual variant of the figure in that color scheme probably exists, and it was of course by Mattel, but maybe a test run or a promotion figures.
Existance of AFA graded figures doens't prove anything.
AFA can only grade the toys, but isn't an higher authority when it comes to the knowledge about the toys.
The simply know less then us when it comes to the so called "savage" He-Man.